MacroEcon Unit #4

In 2010, 100 Japanese yen purchased 0.88 U.S. dollars and in 2013, it purchased 0.93 U.S. dollars. How much was 1 U.S. dollar worth in Japanese yen, in 2010 and 2013? A - 2010: 88 yen, 2013: 93 yen B - 2010: 100 yen, 2013: 114 yen C - 2010: 113.6 yen, 2013: 107.5 yen D - 2010: 112.4 yen, 2013: 105.3 yen

2010: 113.6 yen, 2013: 107.5 yen

____________ means selling goods below their cost of production. A - Protectionism B - Dumping C - Import quotas D - Non-tariff barriers

Dumping

_____________ are numerical limitations on the quantity of products that can be imported. A - Tariffs B - Import quotas C - Taxes D - Nontariff barriers

Import quotas

________________________ is theoretically possible, even sensible: give an industry a short-term indirect subsidy through protection, and then reap the long-term economic benefits of having a vibrant healthy industry. A - Opportunity cost B - The infant industry argument C - Dumping D - Import quotas

The infant industry argument

Which of the following would be expected if the tariff on foreign-produced automobiles were increased? A - The domestic price of automobiles would fall. B - The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise. C - The number of unemployed workers in the domestic automobile industry would rise. D - The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations.

The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise.

What do goods like gasoline, tobacco, and alcohol typically share in common? A - A progressive tax is imposed on each of them. B - A regressive tax is imposed on each of them. C - They are all subject to government excise taxes. D - They are all subject to government fiscal taxes.

They are all subject to government excise taxes.

The most commonly traded currency in foreign exchange markets is the: A - euro. B - U.S. dollar. C - Chinese yuan. D - British pound.

U.S. dollar.

If the government for the state of Washington collects $65.8 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be: A - an increase in payroll tax. B - an increase in excise tax. C - a budget surplus. D - a budget deficit.

a budget deficit.

If government policy allows a country's currency to be determined in the exchange rate market, then that currency will be subject to: A - a hard peg policy. B - purchasing power parity. C - depreciation. D - a floating exchange rate.

a floating exchange rate.

A tariff differs from a quota in that a tariff is: A - levied on imports, whereas a quota is imposed on exports. B - levied on exports, whereas a quota is imposed on imports. C - a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. D - a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

Movements in exchange rates can have a powerful effect on incentives to export and import, and thus on ________________ in the economy as a whole. A - aggregate supply B - aggregate demand C - direct investments D - portfolio investments

aggregate demand

A ______________________ means that government spending and taxes are equal. A - fiscal budget B - balanced budget C - contractionary fiscal policy D - discretionary fiscal policy

balanced budget

If the state of Washington's government collects $75 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be a: A - budget deficit. B - budget surplus. C - decrease in payroll tax. D - decrease in proportional taxes.

budget surplus.

As international trade increases, it contributes to a shift in jobs away from industries where that economy does not have a(n) __________ advantage and toward industries where it has a(n) ___________ advantage. A - absolute; absolute B - comparative; comparative C - comparative; competitive D - comparative; absolute

comparative; comparative

A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes. A - expansionary B - contractionary C - discretionary D - standardized

contractionary

When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting: A - discretionary fiscal policy. B - progressive fiscal policy. C - regressive fiscal policy. D - fiscal policy.

discretionary fiscal policy.

The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that: A - firms will be protected from subsidized foreign competition. B - domestic producers can attain the economies of scale to allow them to compete in world markets. C - there will be adequate supplies of crucial resources in case they are needed for national defence. D - it will not be subjected to a takeover from a foreign competitor.

domestic producers can attain the economies of scale to allow them to compete in world markets.

If a government reduces taxes in order to increase the level of aggregate demand, what type of fiscal policy is being used? A - discretionary B - contractionary C - standardized D - expansionary

expansionary

Which of the following terms is used to describe the set of policies that relate to government spending, taxation, and borrowing? A - financial policies B - monetary policies C - fiscal policies D - economic policies

fiscal policies

People or firms use one currency to purchase another currency at the _______________________. A - international currency exchange B - foreign exchange market C - foreign currency exchange D - international parity market

foreign exchange market

The _____________________________ is the largest market in the world economy. A - international exchange market B - foreign exchange market C - foreign currency market D - international currency market

foreign exchange market

An import quota or tariff on French wine that raises the prices for wine will probably: A - hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices. B - hurt both domestic wine drinkers and domestic wineries, but this will be more than offset by a reduction in driving fatalities. C - hurt both domestic wine drinkers and domestic wine producers because of a reduction in competition. D - hurt domestic wineries, which will lose business as a result of the higher prices.

hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices.

Tariffs are taxes imposed on _________________. A - imported products B - exported products C - hazardous goods D - surplus goods

imported products

If a country�s GDP increases, but its debt also increases during that year, then the country�s debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes. A - decrease because GDP increased B - increase because its debt increased C - increase D - increase or decrease

increase or decrease

If the Canadian dollar is strengthening, then: A - it has been unpegged from other currencies. B - Canada has adopted a hard peg policy. C - Canada has purchasing power parity. D - it has appreciated in terms of other currencies.

it has appreciated in terms of other currencies.

A __________________________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes. A - proportional tax B - regressive tax C - progressive tax D - excise tax

progressive tax

A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income. A - progressive tax B - regressive tax C - proportional tax D - estate and gift tax

proportional tax

If government tax policy requires Bill to pay $20,000 in taxes on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is: A - regressive. B - progressive. C - proportional. D - optional.

proportional.

When the share of individual income tax collected by the government from people with higher incomes is smaller than the share of tax collected from people with lower incomes, then the tax is ____________________. A - optional B - proportional C - progressive D - regressive

regressive

If government tax policy requires Peter to pay $15,000 in tax on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is: A - optional. B - progressive. C - proportional. D - regressive.

regressive.

When a government uses a ______________ exchange rate policy, it usually allows the exchange rate to be set by the market. A - PPP B - soft peg C - hard peg D - currency

soft peg

Foreign direct investment is the term used to describe purchases of firms in another country that involve ______________________. A - internationally traded goods across countries B - using another currency C - taking a management responsibility D - the exchange rate market

taking a management responsibility

If 112 Japanese yen purchased $1.00 U.S. in 2008 and 83 Japanese yen purchased $1.00 U.S. in 2009, then: A - the dollar depreciated against the yen. B - the dollar appreciated against the yen. C - the yen depreciated against the dollar. D - the yen weakened against the dollar.

the dollar depreciated against the yen.

If 20 Mexican pesos could buy $2.00 U.S. dollars in 2006 and $1 U.S. dollar in 2010, then: A - the dollar depreciated against the peso. B - the peso appreciated against the dollar. C - the dollar strengthened against the peso. D - the peso strengthened against the peso.

the dollar strengthened against the peso.

Tariffs result in a decrease in consumer surplus because: A - the price and the quantity consumed of the protected good increases. B - the price and the quantity consumed of the protected good decreases. C - the price of the protected good increases and quantity consumed decreases. D - the price of the protected good decreases and quantity consumed increases.

the price of the protected good increases and quantity consumed decreases.

If Japan does not have a comparative advantage in producing rice, the consequences of adopting a Japanese policy reducing or eliminating imports of rice into the country would include: A - Japan will be able to consume a combination of rice and other goods beyond their domestic production possibilities curve. B - the real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall. C - the real incomes of Japanese rice consumers would rise, but the real incomes of Japanese rice producers would fall. D - the price of rice in Japan will fall.

the real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall.

Exchange rates are an effective way to analyze the price of one currency in terms of another currency with _________________________. A - distinctive trade-offs and risks B - exchange rate policy C - monetary policy D - the tools of demand and supply

the tools of demand and supply

International trade is fundamentally a ________________________. A - win-lose situation B - lose-lose situation C - win-win situation D - war which is won by the strongest

win-win situation

If $1.00 U.S. bought $1.40 Canadian dollars in 2006 and in 2010 it bought $1.00 Canadian dollar, then; A - the U.S. dollar appreciated against the Canadian dollar. B - the Canadian dollar weakened against the Canadian dollar. C - the U.S. dollar strengthened against the Canadian dollar. D - the Canadian dollar appreciated against the U.S. dollar.

the Canadian dollar appreciated against the U.S. dollar.